Supreme Court to Review Plaintiffs’ Right to Recover Medical Expenses

In a personal injury action, the jury will review the evidence presented at the trial and determine an amount of money to award the plaintiff. The amount depends on multiple factors including medical expenses, pain and suffering, loss of consortium and any other damages suffered by the plaintiff. In California, the Court of Appeal has held in three landmark cases that a plaintiff’s damages amount need not be reduced even if the plaintiff has received a payout from his medical insurance. In other words, the plaintiff has a right to recover the full amount of his injuries regardless of any other payments made to him outside court. However, the California Supreme Court has chosen to review this line of precedent to determine whether a plaintiff’s jury award should be reduced to reflect any medical insurance payouts provided.

The current environment in California is extremely friendly to personal injury plaintiffs. In Howell v. Hamilton Meats & Provisions, Inc., the Court of Appeal held injured plaintiffs may recover monetary damages to reflect the full amount of their injuries even if the medical insurance company already paid the less than the billing amount. Under the Collateral Source Rule, the jury is estopped from reducing a recovery amount simply because the plaintiff received an amount from a non-party. In addition, Howell requires that the plaintiff is compensated for the full amount of his billed medical expenses as opposed to any negotiated lesser amount.

The California Supreme Court has agreed to review these cases to determine whether the Collateral Source Rule is appropriate as applied to California personal injury cases. If the cases are upheld, personal injury plaintiffs will continue to enjoy the Rule’s protections and can collect the full amount of their billed expenses. However, should the court reverse the cases, plaintiffs will have their damages amounts reduced to reflect the amount paid out by the insurance companies. Plaintiffs will be unable to recover the full amount of their expenses in court and may only recover for non-monetary damages and hardships as a result of the injury.
The Collateral Source Rule is of antiquity and dates back to the 1800’s. Proponents of the law wanted to see responsible parties pay in full for their torts as opposed to avoiding responsibility simply because the injured party was covered with medical insurance. Recently, advocates for tort reform have argued that the Collateral Source Rule is unfair as it could result in plaintiffs being compensated twice over for the same injury. As such, many states have done away with the rule. To avoid this result, many insurance companies hold a lien over the jury award requiring the plaintiff to pay the insurer back for the amount already paid out.

It will be interesting to follow the California Supreme Court’s decision on the Collateral Source Rule as it will directly affect personal injury plaintiffs’ recover rights. While it is always important for defendants to pay for their injurious conduct, it is also in the interests of justice for plaintiffs not to be overly compensated for their injuries.